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Facebook Ups Contest With Google With New Video Ad Options

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Facebook (FB - Free Report) recently unveiled the In-Stream Reserve program and ThruPlay, two new video ad products on its platform.

With the In-Stream Reserve, companies can choose to advertise on the most popular videos on Facebook. This program also provides companies with the choice of types of videos on which they wish to put their ads.

For instance, In-Stream Reserve will enable companies to reach a broader audience based on the specific content, like ‘Ball in the Family’ — one of Facebook’s most popular original contents.

On the other hand, ThruPlay charges advertisers only for ads that are watched till the end, or for at least 15 seconds. This video ad option is similar to Alphabet’s (GOOGL - Free Report) Youtube video ads powered by Google Preferred, which enables companies to pay only for the 30 second ads, which are watched till completion.

Facebook's Video Push

Facebook intends to capture the opportunity presented by ever-increasing video viewing on social media platforms. Online video is the most lucrative component of digital advertising.

As video ads generate more revenues than its photo and text-based substitutes, Facebook is trying to incorporate more and more video-oriented content to bring in more ad dollars. The company has also launched Watch, a dedicated tab for video viewing, to achieve its goal.

Last quarter, the company’s revenues soared 41.9% year over year due to focus on video push.

Facebook, Inc. Revenue (TTM)


Facebook, Inc. Revenue (TTM) | Facebook, Inc. Quote

The company witnessed healthy growth in video ads among all advertiser segments. Moreover, Facebook is making it easier to run ads on Instagram and in Stories.  The social networking giant also revealed that it is rolling out ads to Stories in the core Facebook app globally, which will operate similarly to ads in Instagram Stories.

Further, availability of tools like Ads Animator is expected to boost video growth. The company is also testing Video Creation Kit that provides advertisers with easy-to-use video templates for a wide variety of marketing objectives.

We believe that increasing user engagement and investments to improve effectiveness and relevance of ads will help Facebook lure more advertisers.

Facebook — A Leading Player

Google dominance in advertising is long documented. Reportedly, Google accounted for more than 44% of global online ad revenues by the end of 2017, with Facebook generating 18% of the same.

Analysts at New York-based investment firm Cowen believe Facebook will emerge as the digital ad leader, replacing Google, driven by the growing popularity of video advertisements and Instagram. The firm had also predicted earlier this year that Facebook and Instagram’s ad budgets will increase in 2018 and 2019, while that of Google Ads will decline.

Per eMarketer, U.S. social network video ad revenues are expected to reach $11.69 billion in 2020, up approximately 106% from the 2017 total of $5.68 billion.

Facebook (including Instagram video ads) will generate $10.2 billion in video ad revenues in 2020, which equates to 87.3% of the total market share. Snap (SNAP - Free Report) and TWTR (TWTR - Free Report) , on the other hand, will account for just 6.2% and 6.4%, respectively, adds eMareketer.

Facebook currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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